JP Morgan Chase officials won't be penalised as part of a deal the largest US bank is negotiating with the Justice Department over alleged failures to warn about Bernard Madoff's massive fraud, said people close to the talks.

Manhattan US Attorney Preet Bharara and US banking regulators intend to announce a total of more than $2 billion in fines this week, these people said. But all fines will be paid by the company as opposed to individuals, these people added.

The decision contrasts with the approach taken last year in the case of JP Morgan's "London whale" trading debacle, where two former traders were charged with hiding losses on runaway bad bets that cost the bank more than $6 billion. The ex-traders are fighting the charges. Numerous ex-Madoff employees also face trial or have pleaded guilty in connection with the Ponzi scheme that Madoff acknowledged after his firm collapsed in 2008.

New York-based JP Morgan is expected to sign a so-called deferred prosecution agreement with the Justice Department where it will acknowledge that it didn't have the proper systems in place to catch Madoff, and that various procedures designed to root out and report such suspicious behavior were flawed, said people close to the talks. An announcement is expected as early as Tuesday.

JP Morgan has said previously that it didn't know about or participate in the Madoff fraud.

JP Morgan had a two-decade-long relationship with Madoff before his arrest in December 2008. A central component of an investigation conducted by the Manhattan US Attorney's Office and the Federal Bureau of Investigation is the bank's failure to file a formal report raising concerns about Madoff in the US despite filing such a document with authorities in the U.K. in 2008, said people close to the case. The US Attorney's office and FBI declined to comment.

Federal law requires banks to file a suspicious-activity report, or SAR, when they "detect certain known or suspected violations of federal law or suspicious transactions." There were roughly 1.6 million such reports filed in 2012, the most recent year for which federal data are available. JP Morgan alone typically files 150,000 to 200,000 such reports each year.

JP Morgan would become the first major US bank in recent years to settle Bank Secrecy Act violations in the form of a deferred prosecution agreement, said Brandon Garrett, a University of Virginia School of Law professor who tracks such cases.

Under such a pact, companies typically pay a penalty and prosecutors file charges that are dismissed after a set period if the company lives up to certain conditions. It isn't typical for employees to be charged as part of such cases, Garrett added.

The last foreign bank to agree to such violations in the US was London-based HSBC Holdings, which in 2012 signed a deferred prosecution agreement that resulted in the forfeiture of $1.26 billion.

Justice Department officials said HSBC failed to maintain effective controls around money laundering, illegally conducted transactions for certain overseas customers and "facilitated the laundering of at least $881 million in drug proceeds through the US financial system." HSBC also agreed to make structural changes to its anti-money laundering operations and pay an additional $665 million to US banking regulators.

HSBC's chief executive said at the time that "we accept responsibility for our past mistakes."

The bulk of JP Morgan's fines are expected to be routed to victims of Madoff, who pleaded guilty to charges he ran a decades-long Ponzi scheme that bilked investors out of billions of dollars. Penalties paid to the Justice Department are expected to form the largest chunk of the total—an amount greater than $1.5 billion, these people said. The Justice Department is expected to handle the payments to victims.

The rest of the penalties that don't go to the Justice Department will be paid to the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network, both of which are part of the Treasury Department.

The OCC, the primary regulator of JP Morgan's banking operations, is expected to highlight in its action larger money-laundering control weaknesses beyond the bank's dealings with Madoff. An OCC spokesman declined to comment.

The federal actions would be the latest in a string of legal settlements for JP Morgan, which agreed over several months in 2013 to pay out nearly $20 billion to end an array of lawsuits and investigations relating to past mortgage bond sales and the "London whale" episode. It set aside third-quarter 2012 legal reserves of $9 billion and told investors that $23 billion was on hand to absorb future settlements and lawsuits.

JP Morgan is due to report fourth-quarter 2013 earnings on Jan. 14. Bank officials were hoping to get the Madoff settlements done before the release of earnings, said a person close to the bank.

Last month, JP Morgan Chief Executive James Dimon referenced the Madoff case while discussing the strategy behind the recent spate of settlements. "You read about Madoff in the paper the other day," he said at a Goldman Sachs financial-services conference in New York. "We have got to get some of these things behind us so we can do our job. Our job is to serve clients around the world. That's our job. So I want to get it behind us."